Questions on "Keys" {Beginner}

The more I start to kind of figure out about music the more confused I get.

I understand how to find the root of a scale and how to find a scale pattern in the key of...whatever. (I think)

After reading Pacman's scale practice advice, I got to thinking how and when does the scale stop being in the key of C? I read what is said about playing an octave and 1/2 in the "box" but does the scale stop being a c-maj scale when you move out of the box?

How do you tell how to play when someone says it is in the key of G for example?

Look at JAZZBO's lesson, he's got a nice one there. SEARCH also "Circle of Fifths". Simply put C major is the scale that is all the white keys on the piano, that has no alterations to the notes (no flats or sharps. You derive the other major scales by altering the notes by adding sharps or flats (called accidentals) to the key signature. The circle of fifths is helpful because as you add accidentals, you keep moving a fifth away from the key before.
Take C major

C - 1
D - 2
E - 3
F - 4
G - 5
A - 6
B - 7
C - 8 or OCTAVE

This is all covered in Jazzbo's lesson, but look at how the major scale is constructed -
C to D is a whole step
D to E is a whole step
E to F is a half step
F to G is a whole step
G to A is a whole step
A to B is a whole step
B to C is a half step

SO you get (using W for whole and H for half)
from the root - W W H W W W H, you with me so far?

So you ask about G major. well lets' build a G major scale using our formula.
G to A
A to B and now a half step
B to C
C to D
D to E
E to (whole step not F but )F#
F# to G

G A B C D E F# G Gmajor. So now let's look at the C major scale C D E F G A B C and think about the circle of fifths. Look back up at the first list of C major, the one where I listed the scale degrees beside the note names. Do you see that G is the Fifth of the C major scale? So if you alter the C major scale by 1 sharp you get the major scale that's a fifth away. What do you think happens if you alter the G major scale by 1 sharp?

Yup you get the major scale built off of the fifth of the Gmajor scale. What note is that?

Yup, D. G1 A2 B3 C4 D5. Is that clear? So how do you determine what note is the note that gets changed? For now you can use the method of building the major scale (D E F# G A B C# D), but this is one of those things that generally turns into rote memorization and that's why the Circle of Fifths is a good tool.
To get the flat keys you go around the opposite direction, which you can think of as fourths or what key is the key that I am in the fifth of?

But check out the lesson.

But no, the key doesn't stop being the key until you start playing notes out of it. Which is a big can of worms until you get some of this other stuff under your belt. So don't get all freaked out by the next statement.

Just because a song is in a certain key or someone says it is in a certain key does NOT mean that all of the chords in tha song are going to be in that key. There's a lot of other concepts going on. There's predominant key, secondary dominance, modulation, false modulation, modal interchange.